10 Ways Investments and Markets Have Evolved

Over the 30 years that Dimensional has been working with financial advisors, investments and markets have evolved to help people have a better investing experience.

This year, Dimensional is celebrating 30 years of working with financial advisors, a collaboration that has helped change the way the world thinks about investing. To recognize that impact, we have compiled 30 ways that investors can benefit from the industry’s transformation. In this second of a three-part series, we consider 10 ways that capital markets and investment approaches have realigned for the better. —Dave Butler, Co-CEO

2. Theoretical and empirical research identifies drivers of investment returns.

Research shows that stocks offering higher expected returns can be identified using company size, relative price, and profitability. For bonds, information in the yield curve and credit spreads reveals higher expected returns.

4. Commissions on securities trades have dropped.

The rise of electronic trading networks diminishes the influence of large market exchanges, while reduced broker commissions bring lower average trading costs across markets.

5. Bid-ask spreads on securities trades have compressed.

Advanced technology, decimalization, and multiple trading venues reduce implicit costs by narrowing bid-ask spreads across trades. Investment strategies that have more trading flexibility can further reduce these spreads.